A monopolistically competitive market is characterized by:
A) many small sellers selling a differentiated product.
B) a single seller of a product that has few suitable substitutes.
C) very strong barriers to entry.
D) mutual interdependence in pricing decisions.

Question

Quizplus · Accepted Answer

A monopolistically competitive market is characterized by many small sellers selling a differentiated product, meaning that there are competitors in the market but their products are not identical. This differentiation allows firms some pricing power and independence in decision making, but they are still interdependent to a certain extent. In contrast, option B describes a monopoly, option C describes a market with significant barriers to entry, and option D describes an oligopoly.

A Monopolistically Competitive Market Is Characterized By